The US FTC warns franchisors against unfair business practices, sparking mixed reactions.

From Investing.com: 2024-07-12 18:52:36

A U.S. trade regulator cracks down on unfair practices by franchise brand owners, such as hidden fees and discouraging franchisees from speaking with regulators, targeting major brands like McDonald’s and Subway. The FTC deems these practices illegal, sparking criticism from the International Franchise Association but support from FTC Chair Lina Khan.

FTC declares it illegal for brand owners to intimidate franchisees from discussing unfair practices or potential law violations, issuing a policy statement and soliciting comments. New guidance prohibits undisclosed junk fees imposed by brand owners on franchisees, not outlined in contracts, with examples of costs introduced through changes to operating manuals.

Franchise-related complaints to the FTC soared over the past three years, prompting the agency to take action against brand owners who silence franchisee criticisms with non-disparagement clauses. McDonald’s franchisees, through the National Owners Association, criticize the burger chain for imposing new costs through manual changes and prohibit negotiation, as reported by Reuters.



Read more at Investing.com: US FTC issues warning to franchisors over unfair business practices By Reuters